Oil Prices, Economy Send Stocks Lower
Stocks’ recent winning streak halted Tuesday as concerns about oil prices, the economy and terrorism again weighed on investor sentiment.
The technology-dominated Nasdaq composite led the market lower, as it had during the sell-off that dragged stocks down for much of July.
The Nasdaq index slumped 32.67 points, or 1.7%, to 1,859.42, closing near its low for the session.
The Dow Jones industrial average lost 58.92 points, or 0.6%, to 10,120.24, and the Standard & Poor’s 500 was off 6.93 points, or 0.6%, to 1,099.69.
The Dow and the S&P; had risen for five straight sessions through Monday, even shaking off the government’s warning on Sunday about possible terrorist attacks against key financial institutions in New York, New Jersey and Washington.
But share prices struggled at the opening Tuesday, and sellers were in control during the final few hours. Losers topped winners by 2 to 1 on Nasdaq and by 5 to 4 on the New York Stock Exchange.
Analysts said the continuing rise in crude oil prices, which pushed near-term futures in New York up 33 cents to a record $44.15 a barrel on Tuesday, is damping hopes for the economy after a weaker-than-expected spring quarter.
“The longer oil prices stay where they are, the more trouble we have for earnings and growth in the second half of this year,” Joseph Quinlan, chief market strategist at Banc of America Capital Management in New York, told Bloomberg News.
The government on Tuesday reported data on June personal spending and income that raised more fears about the extent of the economy’s recent slowdown.
Some reports on July activity have suggested that business activity was improving, but “I don’t think the economy will be roaring back,” said Graham Tanaka, president of Tanaka Capital Management in New York.
That may make many investors skittish about paying higher prices for stocks, some analysts say.
But others say any break in oil prices could revive bullish sentiment.
“If we can get oil prices down a buck or two, we’ll see a nice market gain,” said Richard Cripps, chief market strategist for Legg Mason in Baltimore.
The government’s report on July employment, due Friday, also could give the market a boost if it shows that job growth picked up from June levels, analysts say.
Among the day’s highlights:
* Yields on long-term Treasury bonds eased for a fifth straight session, as weak economic data encouraged some investors to lock in yields. The 10-year T-note fell to 4.43% from 4.45% on Monday. It was as high as 4.62% last week.
* Earnings reports and forecasts hit some stocks. Telecom giant Qwest Communications plunged 80 cents to $3.17 after reporting a second-quarter loss.
Also, Priceline.com, a seller of discount-travel services on the Internet, tumbled $3.44 to $20.29. The company forecast third-quarter profit of as much as 30 cents a share, lower than the 31-cent average analyst estimate.
San Diego-based Ligand Pharmaceuticals, which makes cancer and pain drugs, dropped $5.41 to $8.18 after reporting a quarterly loss and saying its accounting firm had resigned, though Ligand said it had no disagreements with its auditors.
* Semiconductor stocks dragged the tech sector lower. They also were among the sector’s biggest losers in July. The SOX index of major chip stocks slid 3.8%. Intel dropped 73 cents to $24.17, International Rectifier lost $1.98 to $37.15 and Broadcom was off $1.64 to $33.50.
* Internet-related shares also were weak, hurt in part by Priceline.com. EBay dropped $2.07 to $77.08, Netease.com slumped $4.67 to $33.39 and Digital River fell 97 cents to $27.38.
* Restaurant stocks lost ground on worries about consumer spending. Cheesecake Factory fell $1.03 to $40.87 and Landry’s Restaurants slid $1.23 to $28.72.
* Energy stocks rallied with oil. ChevronTexaco jumped $2.18 to $98.66, Kerr McGee gained $1.08 to $53.25 and Murphy Oil was up $1.24 to $78.40.
* Some utility shares attracted buyers. Edison International added 38 cents to $26.43 and American Electric Power gained 22 cents to $31.64.
